East Africa to experience mixed economic growth in 2019: analyst

Skyline of Addis Ababa, Ethiopia

East African nations are expected to experience mixed economic growth in 2019, an analyst said on Tuesday.

Judd Murigi, head of research, ICEA LION Asset Management, told a media briefing in Nairobi that Kenya and Rwanda are expected to achieve decelerated Gross Domestic Product (GDP) growth in 2019 as compared to last year.

“However, in Uganda we expect a recovery in the agriculture and trade sectors which could boost overall economic growth in 2019,” Murigi said.

According to the Kenya National Bureau of Statistics (KNBS), the country’s economy expanded by some 6 percent in the third quarter of 2018.

Murigi said deceleration of GDP growth is projected in 2019 in Kenya is because of the base effects.

Murigi said that the strong GDP growth witnessed in the first three quarters of 2018 in Kenya was driven by a rebound in the two largest sectors of the economy, namely agriculture and manufacturing.

“We note that over the last five-year economic cycle, the agriculture and manufacturing sectors typically have their weakest showing in the fourth quarter, meaning that some deceleration in headline GDP growth may be seen in the final quarter of 2018,” he said.

He further stated that the fact that the strong showing in 2018 was partly driven by a low base in 2017, as well as the tendency for agriculture and manufacturing to have alternating years of strong and moderate growth over the last economic cycle, GDP growth in 2019 may well normalize back to the sub-6 percent levels that were prevalent over the last economic cycle.

The head of research, however, emphasized that GDP growth of 5.5 percent and above would still represent a robust expansion of the economy and double the average growth rate of Sub-Saharan Africa economies.

According to the analyst, Uganda’s GDP remained flat at approximately 6.1 percent in the first nine months of 2018 despite sharp declines in the key sectors of agriculture and trade while strong recoveries were witnessed in the manufacturing, construction and real estate sectors.

Murigi noted that that the onset of good rains could see a recovery in GDP growth in the final quarter of 2018 driven by agriculture and trade.

He revealed that in Rwanda, GDP growth surged to over eight percent due to the trade, manufacturing and construction sectors which all recorded double-digit growth in the first three quarters of 2018.

“All these sectors have over the cycle mostly recorded single-digit growth, which suggests that growth could decline sharply towards the seven percent range in 2019,” Murigi stated.